By its answer IMC interposed several defenses which rest upon the assertion that IMC executed the contract at Dahlem's insistence before the rider containing land description was inserted by Dahlem, and it claims the contract was invalid for the following reasons: (i) the existence of bentonite deposits on the described lands was already known to IMC through prior geological explorations and studies and hence there was a failure of consideration as Dahlem did not disclose to IMC any bentonite deposit, the existence of which was known only to him; (ii) when IMC first saw the land description tendered by Dahlem it repudiated the contract and disavowed any intention to be bound thereby; (iii) Dahlem fraudulently induced IMC to sign the contract upon representations that the secret bentonite deposits were near IMC's plant at Smithville and within an economically feasible distance from that plant, although Dahlem knew that his alleged secret bentonite discovery was in an entirely different area of Monroe County and located south of Aberdeen, and was of a quality of bentonite different from that in which IMC was interested; and (iv) Dahlem and Dabbs are estopped on account of Dahlem's actions in obtaining IMC's signature to the contract in the first instance and barred by laches because of inaction after disavowal of the contract.

The parties have agreed to submit for decision the basic issue of liability, reserving for future hearing an accounting in event the plaintiff might prevail. After the entry of a pretrial order, the court conducted an extensive evidentiary hearing. The case is now ripe for decision and this Memorandum Opinion shall suffice for findings of fact and conclusions of law required by Rule 52 of F.R. Civ. P.

Despite Dahlem's discovery, his first efforts to arouse interest in the new material were unsuccessful. In the early 1930's however, he induced Perel and Lowenstein (P & L), owners of a laundry in Memphis, Tennessee, to develop the mineral deposit he had earlier located. P & L purchased 320 acres just east of Dahlem's own property and began an exploratory program. P & L employed Dr. Poole Maynard, a New York geologist, to make a detailed study of the bentonite discovery, and Dahlem learned the methods of geological exploration for bentonite by working with Maynard. These investigations included digging wells and shafts for drilling numerous holes with hand augers, none exceeding 35 feet, and taking samples for laboratory analysis. Maynard conducted these tests on property south and east of the yellow area, or lands in controversy; and his geological studies culminated in a report dated March 18, 1935, and known as the Poole Maynard Report.

In September 1955, Tracy Lusk, a Mississippi-located geologist, was hired by IMC to work under Dr. Hunter's supervision. Lusk's work was divided between development drilling of known deposits and wildcat drilling in areas geologically favorable for the occurrence of bentonite deposits. Using the Hunter-Hall data as a guide, Lusk conducted field investigations in different locations as directed by Hunter and sent samples of clay for analysis to IMC's Smithville plant, where C.M. Clay was superintendent. In mid-October, Hunter suggested that Lusk make reconnaissance of the general area around Aberdeen and contact Dahlem to determine if he would give out information. In his weekly report of November 7, Lusk advised he had contacted Dahlem, who was claiming to know of two secret deposits which he would disclose for a royalty consideration.
*fn7"

As established by the Lusk weekly reports, Dahlem then showed Lusk the location of various holes on the subject land,
*fn9"
which Dahlem claimed he had drilled and gave him clay samples for analysis. IMC took steps to acquire options wherever possible, and Lusk began at once drilling in the yellow area, starting with Delma Smith at the western extremity. There is no direct evidence from the named property owners that in 1955 they were aware of the existence of bentonite deposits on their lands; and Lusk and other IMC personnel closely guarded their drilling data. Lusk pursued a program of deep-hole drilling throughout the yellow area, and despite the thick overburden, was successful in locating large deposits of bentonite. At the end of several months' exploration he was able to determine that the bentonite bed in the Panther Creek area "is one very large bed about 3 miles long from north to south with the Perel & Lowenstein and Dahlem mine located near the center"; with the maximum thickness 10.5 feet and the maximum width of the bed about one mile located slightly north of the original P&L mine.
*fn10"
Lusk was able to estimate total reserves of 13 million tons in the Panther Creek area consisting of the original P&L and Dahlem lands, the lands in the yellow area and an adjoining quarter section (SW 1/4 of § 13) known as the Worthy tract. Lusk's work with IMC was terminated in March 1956 and no further exploratory work was done by IMC on the subject area.

IMC's claim of fraud is based upon the contention that Dahlem tricked it into signing the contract by representing that his secret deposit was located near IMC's Smithville plant, and that it was of the Smithville-type clay with little overburden, thus meeting IMC's known desire to mine additional deposits in the Smithville area to keep its established plant in operation. The assertion is that Dahlem misled defendant since the yellow area which he designated, and situated south of Aberdeen, was well beyond the Smithville region, and the Tombigbee bentonite found in that vicinity could not feasibly be processed at the Smithville plant.

It hardly requires citation of authority to affirm the familiar rule that fraud must be proved by clear and convincing evidence,
*fn12"
or by clear proof which is more convincing than a mere preponderance of evidence.
*fn13"
The difficulty of proving actual fraud does not obviate the necessity of doing so; and mere suspicion, insinuation or presumption is not sufficient.
*fn14"
IMC, as the party asserting the affirmative defense of fraud, must meet the requisite burden.

Although Mississippi has no factual precedent, we have no doubt that its courts would unhesitatingly follow the general rule concerning furnishing information, stated as follows:

"Although information may be a valuable consideration for a promise to pay for it, where information is proffered as the consideration for a contract it must be new or novel. Information known to everyone is not consideration. A statement to one of what he already knows is not, as to him, information, but a statement of a fact already known; and it cannot constitute consideration . . ." Am. Jur. 2d, ibid, § 99, p. 444.
*fn20"

The defendant incorrectly argues that the burden of proving the presence of valuable consideration rests upon Dabbs. The law is well settled that it is only where a contract is such that on its face no consideration is imported the party relying on the agreement must establish consideration as a basis for recovery. Where the contract, as here, facially imports a consideration, that is, a stated description of lands identified by Dahlem, the burden of establishing the failure of the recited consideration (new or novel information) falls upon IMC, who has asserted it as an affirmative defense in its answer. A defendant, merely by raising the issue, does not shift the burden of proof to the opposite party who relies upon the contract.
*fn21"
The logic of this rule is obvious here since in the absence of any evidence on the issue, IMC would necessarily fail, as the contract itself contains a recited consideration which would not have been undermined by proof. Necessarily this places the burden of proving want of consideration upon the defendant. Despite the foregoing rule, this court finds upon the whole proof that Dabbs has shown the existence of a sufficient consideration by a preponderance of the evidence. The case law, however, supports IMC's contention that failure of consideration, such as to invalidate an agreement, may be shown by parol, extrinsic evidence, dehors the writing.
*fn22"

Grim made visual inspection of outcrops but did no drilling, stating: "As the material is located in the creek bottoms and has not been dug into, it is very hard to get unweathered material for testing." (p. 6) By locating outcrops in parts of Sections 14 and 23, Grim was in obvious error; under uncontradicted proof there are no outcrops in Section 14 or 23.
*fn23"
The only detailed study offered by Grim was of the property owned by Dahlem in the Northeast Quarter of Section 26.

(b) Bay Report -- 1935.

In another early study for Mississippi State Geological Survey, Harry X. Bay (Ex. 163) expounded that there were two distinct beds present in the Panther and Little Panther Creek areas, five miles south of Aberdeen (upper and lower). These deposits were placed by Bay in Sections 24, 25 and 26, yet he mislocated the property owned by N.W. Dahlem to be in Section 24, instead of in the Northeast Quarter of Section 26. Since the only outcrops in Section 24 are located in the Northeast Quarter, it seems clear that Bay intended to include only that quarter section in describing the area of known deposit in Section 24. This report added little to Grim's previous findings.

As heretofore stated, Poole Maynard, a New York geologist hired by P&L, made a detailed study of the properties under the control of P&L. This he did in 1935, pointing out in his report: "I beg to submit the results of my investigation of the bentonite properties under your ownership and control in Monroe County, Miss."
*fn24"
Maynard, who prospected by means of a 4" hand auger and by sinking of shafts, reported: "The bentonite bed gradually rises about twenty feet to the mile going east as Panther Creek cuts its way down, flowing east to the Tombigbee River . . . It was revealed in prospecting that the bed (strata) of bentonite is continuous, so that without fail it was always possible to cross cut the bentonite by means of auger (drill) or shaft. On account of the continuity of the deposit, the outer line of the known commercial bentonite was placed at a series of points 150 feet from the outer edge of auger (drill) holes and shafts . . . The general strike of the bentonite bed is North and South and the bed of bentonite dips to the West from twenty to thirty feet to the mile." (Emphasis added).
*fn25"
The properties drilled by Maynard were located south and east of the yellow area; his program called for shallow-hole drilling and only a few holes were drilled in excess of 20 feet. This geologist estimated known reserves of 548,172 tons on the P&L properties, made up of 190,772 tons of yellow bentonite for strip mining and 357,400 tons of blue bentonite for underground mining. While this report furnished a significant advance over the prior general findings, yet Maynard's drilling was restricted to locations on P&L properties which were characterized by outcrops and a shallow strata of bentonite.

(d) Vestal Reports (2).

(1) 1936. Another State geologist, Franklin E. Vestal, next discussed the four known localities of bentonite in Monroe County, stating one of them to be:

Although relying upon the Poole Maynard report. Vestal, like Grim and Bay, incorrectly located some of exposed outcroppings which did not exist in Sections 14, 23, or in the Northwest Quarter of 24. The samples which Vestal used to determine bleach ratings came only from Dahlem's land (p. 39). This report contributed nothing to the known geology.

(2) 1943. Vestal's second inspection of the Panther Creek area again erroneously listed land Sections 14 and 23 in the region of known deposits. The property owners identified did not include any landowners within the yellow area. Vestal did not indicate that he did any drilling or take any samples from that area. This second field trip unearthed no new information relevant to our inquiry.

(3) 1952. On this third visit in 1952, Mellen made a detailed study of the P&L properties, advising ECP that he was of the opinion that the "properties studied and adjoining lands merit the serious attention of your company." (Ex. 178). It should be stressed that Mellen confined his work to the property controlled by P&L but did not drill thereon. His study consisted of two phases: "(1) the securing of the P&L map and report of Poole Maynard and study of the report and map in the office; and (2) the examination of the mined-out areas and inspection of the remaining reserves as indicated by a relatively few outcrops and general use of Maynard's map in the field." Mellen's report was in essence an evaluation of the original Dahlem discovery in case ECP should consider purchasing it in the future. He did recommend, however, exploratory drilling.
*fn27"
This was the first direct suggestion that IMC might undertake exploratory drilling operations on the P&L property and adjoining lands. Mellen took Maynard's estimated reserves, used Maynard's study and drilling data, and did not attempt to calculate new reserve information for IMC. The tenor of this report was Mellen's belief that P&L property might be more efficiently mined than it had been under American Colloid should exploratory operations on the eastern bluff of the area near the Tombigbee River reveal a continuation of the bentonite deposit.

(f) Stephenson-Moore report -- 1940.

This study (Ex. 191) largely referred to other geological reports and furnished no new data.

(g) Phillips' correspondence -- 1939-42.

E.D. Phillips, the practical prospector mentioned earlier (ante p. 7), advised Dunbeck of his wide-ranging activity in ferreting out tips, rumors and all sorts of reports on minerals. Although his prolific letters (Exs. 71-158) are not easy to place in proper focus, it is clear that his shallow-hole drilling and examination of outcrops did not extend to any land in the yellow area. His findings related to certain property to the north (Alice Strong acreage in § 12), to the east (Bradley tract in § 13), and immediately south of the Bradley tract (Johnson property, NE 1/4 § 24). He estimated only small tonnages, i.e., Strong 15,000 tons, Bradley 30,000 tons and Johnson 50,000 tons, but made no estimates of other property under P&L's control.
*fn28"
Note should be taken of Phillips' confusing reference to the Cole property.
*fn29"
In one letter (Ex. 110) Phillips wrote that he loaned Cole a drill, that Cole found bentonite on his property (of unidentified location), and that Cole would show the clay to Phillips the following week. Phillips never mentioned this again, and the court can give no credence to such hearsay, although it might possibly be that this was the L.B. Cole property located in Sections 14 and 23 (within the yellow area) that IMC is presently mining.

(h) Hunter-Hall report -- 1954.

As heretofore stated, IMC's geologists, Frank Hunter and Roy Hall, in 1954 did extensive drilling in the Smithville vicinity in Itawamba and Monroe Counties, which was far distant from the yellow area. At the conclusion of their work, they designated the four broad areas for IMC's future wildcat drilling. While neither Hunter nor Hall drilled in Area IV, they had available all pertinent geological literature then published by state and federal agencies, as well as the Mellen and Poole Maynard reports. In their summary, these geologists made the following comment regarding Area IV, which was rated lowest in order of priority:

"Area IV was selected because of numerous bentonite deposits reported in the area. Very little is known about the geology of this area and one week of surface geology prior to exploratory drilling would be desirable. If reports are correct, Area IV is a very good prospect although it is farthest from the [Smithville] plant." (Emphasis added) (Ex. 70, p. 27).

The court notes that these geologists compiled all known information on their geologic map (Footnote 4), showing the specific locations of the occurrences of bentonite deposits in Monroe and Itawamba Counties.
*fn30"
It is significant that, despite Mellen's 1952 recommendation, these geologists gave Area IV the lowest priority, but ironically the Hunter-Hall report emphasized the desirability of getting information from Dahlem on his secret deposits, specifically recommending the negotiation of a contract to pay a royalty for the disclosure.

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